PepsiCo’s recent quarterly results exceeded analysts’ expectations, driven by improved organic sales despite a decrease in demand for its snacks due to high prices. To enhance competitiveness, Pepsi plans to lower prices on products like chips in North America this year. The company’s shares rose over 3% in morning trading following the announcement.
Key financial highlights include:
– Earnings per share: $2.26 (adjusted) vs. $2.24 expected
– Revenue: $29.34 billion vs. $28.97 billion expected
– Fourth-quarter net income: $2.54 billion, up from $1.52 billion in the prior year.
While net sales rose by 5.6%, organic revenue increased by only 2.1%, indicating declining sales volumes, particularly in North America. Global food sales volume fell by 2%, while beverage volume slightly rose by 1%. CEO Ramon Laguarta noted that consumer affordability remains a significant barrier, especially for low- and moderate-income shoppers.
Despite a 4% volume decline in PepsiCo Beverage North America, the company anticipates improved demand starting this spring due to retailer support for price cuts. Pepsi is also revamping key brands and diversifying its product lineup with more functional beverages.
The outlook remains optimistic, with expectations for organic revenue growth between 2% and 4% and core constant currency earnings per share growth of 4% to 6% by 2026. Additionally, the company is collaborating with activist investor Elliott Investment Management to streamline its product lineup by 20% and cut costs. CEO Laguarta anticipates better performance in North America while international markets remain stable.
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